Celebrity recounts decisions after Millennium breakdown

The choice faced by Celebrity Cruises management wasn't pleasant. They could try to repair a damaged propulsion pod on the Celebrity Millennium at the risk of a third failure, or they could swallow the millions of dollars of expense required to cancel four cruises, send 2,000 people home by chartered plane and swap out the pod in an unscheduled drydock.

They decided to spend the cash.

"We certainly didn't want to put the ship back in operation and then a month or two later have another incident," said Celebrity CEO Michael Bayley. "We felt as if that was simply not acceptable."

In a phone briefing this week, Celebrity offered a rare behind-the-scenes account of its decision-making process as it struggled with a balky ship during prime season in Alaska.

The briefing was an example of the heightened scrutiny to which cruise lines feel they must respond after witnessing the negative publicity resulting from the fire earlier this year on the Carnival Triumph.

"Certainly we're interested in being very transparent about everything," Bayley said.

The problem Celebrity confronted has periodically plagued nearly every cruise line that uses pods, the self-contained motors bolted beneath the stern that began to be used in the 1990s.

Although they have many advantages in terms of maneuverability, reliability has been an issue. Royal Caribbean Cruises Ltd., Celebrity's parent company, settled a long lawsuit in 2010 with Rolls-Royce, the maker of the Mermaid brand of pods used on four of Celebrity's older ships.

However, Bayley said, the latest problem on the Millennium was a different one, having to do with the motor's electrical parts, not the bearings, which were the focus of the lawsuit.

The first electrical failure on the Millennium forced Celebrity to delay departure of its Aug. 9 cruise from Seward, Alaska, to Vancouver by several days and to cancel all the port calls in Alaska.

After repairs, the ship made it to Vancouver, but on the return to Seward, a similar electrical problem flared in a different part of the pod. That was a surprise, Bayley said.

Again, experts were brought in. The cruise paused in Ketchikan, Alaska, while the pod was examined, and reluctantly the conclusion was reached that the pod had to be replaced.

That decision triggered a series of logistical tests. The first was getting the 2,000 passengers home from Ketchikan, which has a population of 14,000 and an airport with a single, 7,500-foot runway.

"It's a beautiful destination to go to, but it's not a destination designed to move a couple of thousand people from," said Bayley. Celebrity chartered a half dozen jets at a cost of several million dollars to do the job and sent 30 people from Miami headquarters to help.

Next, Celebrity had to arrange a drydock on short notice. Bayley said Celebrity worked down the list of shipyards on the west coast of North America and even looked in Russia and Asia before settling on Grand Bahama Shipyard, in Freeport, where a part ownership by Royal Caribbean allowed for the rearrangement of some schedules.

"Like all situations, there's always a puzzle palace," Bayley said.

Celebrity had a spare pod in Europe, but it had to be transported from Rotterdam, Netherlands. After rejecting the idea of air-freighting the 250-ton pod, Celebrity chartered a ship to deliver it.

It's a four-day job to remove the damaged pod and install the new one. "It's fairly complex," Bayley said. "Obviously we've got the best technical people in the world, and we're feeling pretty comfortable with the process."

After the old pod comes off, it will be returned to France on the chartered cargo ship, to be rebuilt.

Testing of the new pod is expected to be done by Sept. 12. Bayley said Celebrity was not sure whether it could offer some kind of cruise between that date and its next scheduled cruise from San Diego.

"Our intention is to be in San Diego with full operations on Sept. 22."

In the meantime, Celebrity has had to keep the Millennium's 843 crew members occupied with deep cleaning of cabins, additional specialty training and the relocation of the future cruise desk to a different deck.

The Millennium's chefs are using the time to dream up a few surprises for guests who have booked the San Diego cruise, Bayley said.

The total cost of the Millennium incident to Celebrity hasn't been disclosed, but Bayley said it would include the compensation for two impaired cruises and four canceled ones, which all involved full refunds, plus the housing and food for affected guests, air change fees, future cruise certificates, plane charters to Ketchikan and the lost onboard revenue from the scrubbed cruises, in addition to the repairs. One Wall Street analyst has estimated the cost at $31 million, not including the repair itself, which is insured.

"The brand was having a really great year, so it's a little unfortunate," Bayley said.

Dondra Ritzenthaler, Celebrity's senior vice president of sales, said the breakdown had not had any noticeable impact on bookings, a fact she attributed mainly to travel agent support.

"Because we've had an authentic partnership with our travel partners for years, when something like this happens, they are really rallying behind us," she said.

Just in case, Bayley is making a video for travel agents to recap Celebrity's response to Millennium's problems.

"We want his genuine apology as the leader of our brand to really be said in a more formal way," Ritzenthaler said.